A resurgence in crude prices, with Brent topping $115 a barrel to its highest level since May, weighed on equities and government bonds Friday as a flare-up in Middle East hostilities threatened global supplies and revived inflation concerns days before the Federal Reserve’s rate decision. West Texas Intermediate traded above $100. The advance came as Iran-backed Houthi militants claimed attacks on Saudi Arabia’s Red Sea port of Yanbu and on an oil field and airport in the kingdom. State-owned Aramco evacuated its Dhahran headquarters after an alarm, though the precise trigger was not immediately clear. President Donald Trump, speaking at the White House, said the United States had “knocked” out Iran and threatened to go “a little bit further,” without elaboration. Separately, the New York Times reported that Washington and Jerusalem have prepared plans for renewed strikes against the Islamic Republic after the midterm elections early next month. US Ambassador to the United Nations Mike Waltz told the Financial Times that the United States is preparing for a protracted conflict that could still leave it in a stalemate a year from now, with the Navy able to maintain its blockade of Iranian ports for the foreseeable future while economic pressure is tightened.
Brent has risen more than 85 percent this year amid the US-Iran war now approaching its ninth month. Refined-product prices have climbed even faster, particularly diesel, which averaged $6.31 a gallon nationally according to AAA, down from a recent high of $6.53 but well above the $3.76 level seen in late February before the US-Israeli attack on Iran. Flows through the Strait of Hormuz have recovered toward prewar levels, yet Citigroup analysts including Francesco Martoccia cautioned against reading a few days of stronger shipments as full normalization, noting that temporary increases may reflect inventory drawdowns or the release of previously hoarded barrels. Oil-product shipments from the Persian Gulf remain constrained, compounding the effect of Ukrainian strikes on Russian refineries and prompting governments to tap stockpiles. Trump has also pressed measures to ease prices ahead of the midterms, including a diesel arrangement with Moscow. In Iowa, where he rallied Thursday for Republican Senate candidate Ashley Hinson, the president invoked the Defense Production Act to release $150 million for increased refining capacity and announced an $8 billion Harvest Fuel Relief Program to offset diesel costs for farmers, with an estimated $400 million directed to Iowa. He further waived off-road requirements for red-dye diesel so that farmers and truckers could fill up tax-free. The Department of Energy indicated that project selection was still under way, making any near-term dent in prices before the November 3 election unlikely.
The oil move dragged the S&P 500 to back-to-back losses even as selling pressure on technology names eased somewhat. A gauge of chipmakers rebounded, though it remained on course for its longest weekly decline since November. Treasury yields edged higher after the bond market’s best day in more than a year, as the risk-off impulse that had driven a flight to safety began to reverse. Bank of America strategist Michael Hartnett wrote that the risk-off mood is likely to persist well into November, citing jitters around the artificial-intelligence trade and the midterms. “We stay tactically risk-off until mid-Nov,” he noted, expecting a “down-in-yields, down-in-stocks, down-in US dollar trade.” Annex Wealth Management’s Brian Jacobsen observed that the sharp drop in AI-linked stocks this week illustrated how concentrated popular trades can unwind when sentiment shifts. “When everyone owns the same story, even a small disappointment can set off a rush for the exits,” he said, advising that the practical response is not to abandon growth stocks but to rebalance portfolios that have become dominated by a single theme.
The inflationary impulse was visible in real-time activity data. S&P Global’s flash composite purchasing-managers index slipped 0.8 point to 57.6 in October, still the second-highest reading since 2022 and consistent with expansion. A gauge of selling prices rose at the fastest pace in more than four years, reflecting sharp increases in the cost of energy, transportation and raw materials. “Cost pressures remain a key concern, notably as the renewed surge in oil prices reverberates through to impact a wide variety of goods and services,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. Supplier delivery times lengthened the most since 2022 amid material and labor shortages, overloaded suppliers and shipping delays. Outside the pandemic reopening period, Williamson noted, US businesses are enjoying their strongest period of growth since 2015, supported by robust consumer spending, AI-related investment and defense outlays. New orders expanded at the fastest rate in four and a half years, and employment advanced, with the manufacturing index for headcount rising at the quickest pace since 2012. The manufacturing PMI itself inched up to 56, the strongest since May 2022, while services activity eased slightly. Forecasters have lifted estimates for private investment growth both in the third quarter and across 2027, anticipating that AI spending will continue to underwrite demand.
In Germany, Economy Minister Katherina Reiche warned that further refinery closures would harm not only fuel suppliers and motorists but the country’s large chemicals sector. “Whoever loses the refinery loses not only the supply for the gas station, but above all for the chemical complex,” she said after meeting oil-industry officials in Berlin. Europe has spent years shrinking an aging, high-cost refining fleet as cleaner transport and industry erode demand, leaving the region more dependent on imports of diesel and jet fuel—a vulnerability exposed by recent geopolitical shocks and soaring prices. When plants close, “more products are imported, higher prices are paid and there are risk premiums associated with supply security,” Reiche observed. The government aims to develop a new refining strategy by early next year. Petrochemical manufacturers lose domestic feedstock when refineries shut, forcing greater reliance on foreign supplies and potentially eroding competitiveness. Major companies including BP, Shell and ExxonMobil have considered shedding or scaling back European assets; BP sold its Gelsenkirchen refinery this year. Reiche is also pressing for carve-outs from European Union methane regulations that raise compliance costs relative to plants elsewhere.
Geopolitical strains extended beyond energy markets. The White House announced Friday that Russia and Ukraine had agreed to allow humanitarian aid into the Ukrainian city of Oleshky and to prepare an evacuation route for civilians, with the arrangement set to begin October 29. The statement credited First Lady Melania Trump with brokering the deal. “Residents who wish to evacuate will receive coordinated support and transportation to their preferred destination. I anticipate some will want to go to Russia, and some to Ukraine,” she said. Neither government immediately confirmed the announcement. An “impartial American media organization” is to accompany officials, though further details were not provided. Oleshky has faced severe shortages of food, medicine, running water and electricity since Russian forces captured it early in the 2022 invasion; earlier Ukrainian ceasefire requests for civilian evacuations were rebuffed. Pope Leo XIV had separately expressed concern over the city’s humanitarian situation in calls with both Vladimir Putin and Volodymyr Zelenskyy.
Credit Markets Signal Deepening Risk Aversion as AI Spending Scrutiny Intensifies
Metrics across global bond markets registered their most pronounced risk-off tone in more than a year as the selloff in artificial-intelligence equities and rising geopolitical tensions prompted investors to favor safer assets. Spreads on dollar bonds of higher-rated Asian companies widened Friday to levels last seen in July 2025, moving in step with broader credit markets. A Bloomberg index showed global corporate bond yield premiums reaching as wide as 129 basis points, the highest since May 2025. Euro investment-grade spreads also hit their widest since May. “Credit risk is now calling the shots, and Asia cannot hide from the storm,” said Natixis senior economist Gary Ng. “There is a clear US risk aversion in AI-related investment and other global factors that may keep interest rates elevated.” Asian credit-default-swap spreads finished roughly one basis point wider after having been two basis points wider earlier in the session. The volatility prompted the Export-Import Bank of Korea to postpone a yen-denominated bond sale.
Mounting questions over the pace of debt-financed spending on artificial intelligence have unsettled markets amid doubts that the technology will generate profits quickly enough to justify the outlays. Citadel’s Ken Griffin has warned of a bubble, while Blackstone President Jon Gray has described demand as “almost parabolic.” The inverse relationship between US Treasuries and AI-focused equities strengthened to levels last observed a year ago, a sign that the tech retreat is channeling capital back into bonds. “I see this as the beginning of a more sustained repricing of credit risk,” said Lakshmanan R, head of South and Southeast Asia corporates at CreditSights in Singapore. “It is the culmination of multiple global risks hitting markets one after another.” He favors higher cash holdings, money-market instruments and senior bank and financial-sector debt, preferring investment-grade over high-yield exposures within credit. Norbert Ling, Asia Pacific head of fixed income portfolio management at Invesco, remained constructive, noting that wider spreads offer greater compensation for high-quality credit risk. The AI equity rout moderated somewhat Friday, giving investors temporary relief even as Treasuries surrendered part of the previous session’s gains.
Hedge funds registered one of their broadest one-day declines since the Covid period after Thursday’s equity selloff, according to Goldman Sachs’s prime-brokerage desk. For the first time since the pandemic, all three broad equity strategies fell more than 1 percent on the same day. Global fundamental long-short managers dropped 1.4 percent, their worst session since July 16, with telecommunications, media and technology-focused funds down an average of 2.7 percent. Systematic long-short managers suffered their third-worst day since December 2023, losing 1.3 percent. Multistrategy platforms declined 1.9 percent for their second-worst day since the April 2025 tariff episode. More than two-thirds of hedge funds finished lower, as concentrated shorts were squeezed in the afternoon. Asia fundamental long-short managers lost money as well, with month-to-date declines of 9.3 percent, though year-to-date returns remained positive at 14.2 percent. The episode extended a volatile year for AI-related shares, which have seen sharp rallies in names such as SK Hynix and Micron interrupted by painful reversals; in July a technology rout pushed Situational Awareness to the brink.
The Chip-Backed Debt Boom and the Question of AI Returns
Blackstone’s early willingness to finance chip purchases has helped create a market that is on track to become a trillion-dollar sector, larger even than the borrowings used to construct the data centers that house the hardware. In the early stages of the boom, Blackstone executives asked CoreWeave leadership “What is a GPU?” and “Is AI real?” Satisfied by the answers, the firm’s tactical opportunities group led a $2.3 billion private-credit loan in 2023 that became a template for chip-backed financing. CoreWeave, then a little-known AI cloud company, has since seen its stock and bonds battered as investors question whether revenues can justify the spending. Jon Gray this week called AI demand almost parabolic. Virtually every major US bank and alternative-asset manager has entered the space, alongside backstops from Broadcom and Nvidia, whose combined market value is roughly $7 trillion. Broadcom is working with Wall Street firms on a $60 billion debt transaction for a special entity that would buy tensor-processing units and lease them to Anthropic. SpaceX is in talks to raise $40 billion for Nvidia chips. Nvidia itself announced a $500 billion partnership with six major lenders to help customers purchase its graphics-processing units.
JPMorgan analysts project that chip spending could exceed $3 trillion through 2030, with the majority likely funded by borrowing. “You have vendor financing being done at a scale that we’ve never seen before, and being done in a way that the risk is concentrated,” said Jason Pompeii, a senior director at Fitch Ratings. The strategy rests on the conviction that demand for computing power will outstrip supply for years. “These financings are attached to the thing of most value in the market, which is the compute capacity produced by the chips,” said Rich Myers, global head of structured products and private capital markets at Morgan Stanley. Risks include local opposition that has produced a data-center moratorium in Texas, Oracle’s decision to delay payments on a New Mexico project facing regulatory setbacks, and discussions at OpenAI and Anthropic of a slower rollout over safety and existential concerns. Much spending is already locked into projects under construction, and vendors are largely sold out; severe memory shortages have led server makers containing Nvidia chips to inform customers of price increases exceeding 15 percent in many cases.
Chips cost two to four times more than the data centers that house them and depreciate over roughly five to six years. At Nscale’s West Virginia development, the on-site power plant is expected to cost $6.5 billion, the data center and equipment another $18 billion, and the GPUs $47 billion. Investment-grade cloud giants such as Alphabet, Microsoft, Amazon and Meta largely fund hardware through cash or cheap on-balance-sheet bonds. OpenAI and Anthropic, burning cash, and the neoclouds lack those advantages. “The infrastructure build-out is unprecedented,” said Mike Liberatore, business finance officer at OpenAI. “There’s no playbook that shows you how you go from zero to AGI and raise money through traditional means, given it’s a very capital-intensive business.” The industry has adapted project-finance and structured-finance techniques, creating special-purpose vehicles that ring-fence each deal, borrow against the cash flow of the intended customer and the residual value of the chips, and often keep the debt off corporate balance sheets. Maturity is aligned with the expected depreciation schedule. Two main structures have emerged: customers rent chips from an SPV for their own stacks, or neoclouds use debt to buy chips whose computing capacity they then sell.
Broadcom and Nvidia have offered to backstop multibillion-dollar deals, aligning the SPV’s credit rating with the chipmaker’s investment-grade status and lowering borrowing costs. An investment-grade rating is essential for tapping the largest capital pools, particularly insurance money. Apollo’s Chris Edson noted that digital-infrastructure financing exceeds what public markets can supply, requiring project finance, private placements, insurance and commercial real estate. “We have been focused on high-grade opportunities where risks are mitigated through collateral security, amortization, little to no residual risk or renewal risk, diversification and high-grade off-takers,” he said. CoreWeave, founded in 2017 as a crypto miner, pivoted to AI processing power; Microsoft became its largest customer. Its founders adapted a model from liquefied-natural-gas markets in which customers sign contracts first and developers then raise debt against them. The 2023 deal was backed by Microsoft contracts and priced in the mid-teens. “It was the most challenging diligence I’ve ever done in my life,” said co-founder Brannin McBee. Subsequent customers allowed a shift to cheaper bank facilities. In March CoreWeave raised an $8.5 billion package backed by Meta contracts that was viewed in line with Meta’s high rating rather than CoreWeave’s junk grade, cutting the cost to roughly 6 percent.
Last year xAI raised money through an SPV that included an equity investment led by Valor Equity Partners, with Apollo providing nearly $11 billion of debt. Apollo and Blackstone recently completed a $35 billion “Big Sky” transaction to support Anthropic, the first under a platform called AI XPV that could finance 20 gigawatts of capacity—Bank of America strategists estimate this may require $235 billion of backstopped debt by mid-2029. A special financing entity bought the chips for lease to Anthropic; Broadcom’s backstop produced investment-grade ratings for the two senior tranches. The largest pays 5.75 percent, cheaper than Anthropic could obtain as an unrated private company, while a $4.5 billion junior tranche priced at 8.5 percent. “The sector can have many risks, but some financing structures mitigate those risks more than others,” said Ross McAdam of L&G Asset Management. In August Nvidia assembled Apollo, Blackstone, BlackRock, Brookfield, KKR and Goldman Sachs to source financing, of which it would backstop up to 25 percent. Broadcom has held early discussions on financing to help OpenAI purchase custom chips the pair is developing.
To reach scale the structures must move into syndicated markets. CoreWeave became the first to do so with two leveraged loans that met solid demand. The larger goal is the investment-grade bond market. CoreWeave’s corporate junk bonds have fallen to around 80 cents on the dollar, pushing yields to roughly 15 percent, while its two chip-backed loans still trade near par. Chief Executive Officer Mike Intrator said in a statement that building a new type of technology company means the market must work through questions about AI adoption, but that companies differ in technology, customer commitments, financing structures and execution records. Because most deals are private, investors have limited ability to sell, creating concentrated exposure to a small group of interconnected players. “The big are going to get bigger,” said Dave Snyderman of Magnetar. “The incumbents are likely going to win because they’re the only ones who are going to have access to capital.” Contract protections may prove less ironclad in practice. “If you have seven firms that are basically providing all the credit support for the GPUs, who’s got the leverage?” asked Akhil Bansal of Carlyle. Some investors remain on the sidelines. “This is a novel structure,” said Laura Parrott of Nuveen. “We haven’t seen how that plays out if there is some sort of disruption.” Early evidence suggests chips may last longer than current accounting treatment assumes, which would ease financing. Bank of America’s Karen Fang suggested an equivalent of the Kelley Blue Book could emerge for semiconductors, enabling trading and hedging. Once OpenAI and Anthropic go public and, if they secure investment-grade ratings, they could raise chip debt more directly. Blackstone’s John Watson drew a parallel to the early automotive industry and Ford’s Model T: “If you were financing the Ford Model T, you would have asked, ‘What am I doing? Are people really going to drive cars?’ … We have a similar vision for compute.”
Retail Trading Surges After Pattern-Day-Trader Rule Repeal
Retail trading volumes in stocks and options have reached record levels, driven in significant part by the Financial Industry Regulatory Authority’s repeal in June of the longstanding pattern-day-trader rule. The rule had limited investors with less than $25,000 in margin accounts to no more than four day trades in five business days. Its elimination has supercharged activity at a moment when equity prices sit near records and social media is drawing new participants into markets. Robinhood and Webull both reported sharp increases. At Robinhood, daily average trades rose 31 percent for stocks and 67 percent for options in August versus the prior year. At Webull, the average count of daily revenue-generating trades was more than 70 percent higher for both stocks and options. Webull President Anthony Denier called the change the “defining event for the quarter” and said volumes would not revert to pre-repeal levels. Robinhood Chief Financial Officer Shiv Verma described it as a continuing tailwind.
The rule, adopted in 2001 after the dot-com bubble, was initially intended to limit short-term risk for broker-dealers and later viewed as a discouragement to day trading that had produced large losses for many small investors when the bubble burst. Brokerages argued that improved technology now allows real-time risk management, rendering the restriction unnecessary. The rule applied only to margin accounts, which are the default at many trading apps and permit trades to settle without waiting. Investor advocates see the change differently. Benjamin Schiffrin of Better Markets called it “another example of making it easier for people to blur the line between investing and gambling.” A September study by researchers at the University of South Florida and other universities found that retail options trading rose by as much as 24 percent after the repeal, with particularly strong volume in fast-expiring, out-of-the-money contracts favored by day traders—results “consistent with regulatory concerns that relaxing trading constraints encourages retail speculation.”
Peter Tuchman, who runs courses for retail traders through Wall Street Global Trading Academy, said the old rule had forced many students to pay subscription fees to third-party firms for simulated or live trades with the firm’s capital. The repeal removes that necessity. “Now we can get people on the road to education and inspiration,” he said. Consumer advocates and state regulators caution that younger investors may lack familiarity with the lessons of the dot-com era. Trading has become a popular, gamified hobby promoted by influencers. Markets are also accelerating; major US exchanges plan to introduce overnight sessions in December. The North American Securities Administrators Association opposed the repeal, citing a 2024 FINRA survey in which three-quarters of margin traders incorrectly answered a basic question about leverage. The same study showed margin use heavily skewed toward the youngest investors: more than 20 percent of those under 35 reported using borrowed money to amplify bets, versus less than 4 percent of those over 55. Schiffrin described an “anything-goes atmosphere” in which consumer protections are gradually eroded. Robinhood reports third-quarter earnings on October 27; Webull has not yet set a date.
Political Currents: Independents in the West, Tight Races in Iowa, and Amazon Land Battles
Independent Senate candidates are gaining traction across the plains and mountains of the West, reflecting rural voters’ disenchantment with the national Democratic Party even as discontent with Republican governance in Washington mounts. In Nebraska, independent Dan Osborn’s challenge has drawn more than $42 million in spending by Republicans and their allies—roughly double the amount from Osborn and his supporters—according to AdImpact. President Trump flew in for a rally to defend incumbent Pete Ricketts, a former two-term governor. Similar independent campaigns on populist themes are the leading challengers to Republican nominees in Montana, South Dakota and Idaho. While any of them faces steep odds against their states’ Republican tilt and the structural disadvantages of independent candidacies, their appeal signals a broader dissatisfaction heading into 2028. “People out here say, ‘I want things to change,’” said former North Dakota Democratic Senator Heidi Heitkamp, “but they don’t feel respected by the Democratic Party.” Workers in oil, gas and mining have been alienated by some national Democratic positions, and a cultural distance from the party’s brand persists.
The independent candidates have said they would not caucus with either party, yet defeating Republican incumbents would still aid Democratic efforts to capture the Senate. In rural America, about half of voters believe the economy is worse than when Trump took office, but only 39 percent said they would vote for a Democrat for Congress, according to an August Associated Press/KFF poll. The Western independents emphasize anti-establishment themes of confronting corporate power, career politicians and corruption; all are military veterans. Osborn, a machinist and former union official, came within seven points of incumbent Deb Fischer two years ago in a state Trump carried by more than 20. He has championed greater competition in the credit-card industry, stronger antitrust enforcement against meatpacking and other large firms, and a right-to-repair for farmers. Republicans are labeling him “Democrat Dan” to blunt crossover appeal. Senate Republican campaign spokeswoman Bernadette Breslin dismissed the independent bids as a “fake independent circus.”
In Montana, former Green Beret and University of Montana president Seth Bodnar has attracted backing from prominent Democrats and raised more than Republican prosecutor Kurt Alme, though a Democratic nominee remains on the ballot and is likely to split the anti-Republican vote. In South Dakota and Idaho, Brian Bengs and Todd Achilles are running in the same mold. Only Osborn is viewed by nonpartisan analysts such as the Cook Political Report as a genuine threat, and even that race is rated “likely” Republican. “It has to be a perfect storm for one of these independents to prevail,” said Cook’s Jessica Taylor. Nationally, 45 percent of Americans identify as independents according to Gallup, the highest share in decades. A social-media video by Matthew McConaughey urging votes for independents had been viewed more than six million times on X by Thursday. Several Democratic candidates in longtime Republican strongholds have also sought to differentiate themselves from the national party brand. Heitkamp pointed to Kansas megachurch pastor Adam Hamilton and Texas Presbyterian seminarian James Talarico as efforts to reclaim faith as a party value. Hamilton barely mentions his Democratic affiliation and has said he would vote against retaining Chuck Schumer as Senate leader; his opponent, Roger Marshall, mentioned Schumer 17 times in a Wednesday debate. In Iowa, Democratic candidate Josh Turek describes himself as a “common sense prairie populist” and has deliberately projected distance from the national party. Former Montana Senator Jon Tester, who endorsed Bodnar but urged him to run as a Democrat, noted that independents forgo institutional support and the outside money national parties can help attract. Hundreds of millions of dollars are flowing to Democratic candidates in other battlegrounds including Ohio, Texas, Maine, Alaska, Iowa, Michigan and, more recently, Kansas, South Carolina and Mississippi.
In Iowa itself, Trump traveled Thursday to Sioux City to boost Republican Senate candidate Ashley Hinson, locked in a tight race with Democrat Josh Turek to succeed retiring Joni Ernst. The RealClearPolitics average shows Hinson ahead by less than half a percentage point. After a decade of reliable Republican voting, Iowa has become competitive again amid high fertilizer and fuel costs linked to the Iran war and shrinking export markets from tariffs. Trump’s stop was intended to lift turnout in a conservative area. He attacked Democratic Minnesota Representative Ilhan Omar, whose home was recently searched by federal agents, and endorsed a controversial advertisement by Ohio gubernatorial candidate Vivek Ramaswamy, while spending comparatively little time on cost-of-living issues beyond the fuel measures already noted. The Cook Political Report shifted the Iowa Senate race from leaning Republican to toss-up in August. Of the state’s four Republican-held House seats, two are now projected to lean Democratic and one is a toss-up. Democrats need to flip only four Senate seats to win the chamber. Trump’s barnstorming in traditionally red states underscores both the difficult environment for his party and the risk his low approval ratings pose to candidates in competitive districts.
In Brazil, the Amazon frontier town of Novo Progresso has become one of the strongest bastions of support for conservative presidential candidate Flávio Bolsonaro. Vice Mayor Rosana Gonzaga, a cattle rancher affiliated with Bolsonaro’s Liberal Party, explained the town’s stance as “We have been fighting against the environment.” She named President Luiz Inácio Lula da Silva and former Environment Minister Marina Silva among the town’s adversaries in a two-decade fight over protected land. Gonzaga is helping lead a campaign to deliver Flávio Bolsonaro 90 percent of the town’s votes in Sunday’s runoff after he won 84.13 percent there in the first round—the second-highest share among Brazil’s 5,569 municipalities. The runoff presents a stark environmental divide: Lula has pledged to end net deforestation, Brazil’s largest source of carbon emissions, by 2030 and has tied his agenda to Paris Agreement commitments; Flávio Bolsonaro has questioned human-caused climate change and pledged to eliminate only illegal deforestation, leaving room for authorized clearing. Polls show a technical tie; in the first round the conservative led 47 percent to 45.2 percent.
Gonzaga’s family moved to Novo Progresso in southern Pará in 2003, buying primary forest from a private seller even though the land belonged to the federal government and lacked formal title. Three years later Lula’s government included it in a new conservation area, leaving the family and other farmers without access to credit and exposed to fines. During Lula’s first term, with Marina Silva as environment minister, the government sought to make the region a showcase for slowing deforestation along the BR-163 highway, an export corridor for soy from Mato Grosso. In 2006 it created the Jamanxim National Forest, placing Gonzaga’s farm and others inside a federal conservation area intended for sustainable use and research. Gonzaga has become a leader of efforts to privatize about 486,000 hectares within the zone—roughly six times the area of New York City—a goal Flávio Bolsonaro has pledged to advance. “I’m going to carry out the largest land regularization Pará has ever seen,” he said in Marabá. “Your land will be yours on paper. … We’re going to get rid of the environmental restrictions that exist for ideological reasons.” During Jair Bolsonaro’s presidency, enforcement was weakened and deforestation inside Jamanxim nearly doubled relative to the prior period; under Lula it has fallen about 86 percent. In 2019 local farmers organized coordinated fires known as the “Day of Fire” in support of the government and, according to contemporaneous reports, to complicate satellite monitoring. Lula’s 2024 Union with Municipalities program, combining land-tenure reform with technical assistance, had limited impact according to center-right Mayor Gelson Dill, who is not aligned with Bolsonaro. Dill agrees the region needs to legalize land already farmed but worries that expectations of policy change could prompt a rush to deforest.
Billionaires Race to Capture the Zcash Privacy Rally
Prominent early Bitcoin investors are competing once again, this time to capitalize on a roughly 3,000 percent surge in the privacy token Zcash. Cameron and Tyler Winklevoss of Gemini, along with Barry Silbert, founder of Digital Currency Group, are among those helping fuel and profit from the move. The twins are applying the playbook that made them billionaires during Bitcoin’s rise—early purchases and the construction of surrounding businesses. Silbert discovered Bitcoin around the same time in 2012 and followed a similar path. Both camps are now investing heavily in Zcash mining operations and vying to attract investors through competing funds. Over the years the Winklevosses and Silbert have been both partners and rivals; they experienced a high-profile fallout over the Gemini Earn program during the 2022 market collapse. Neither side has publicly framed the current investments as a contest, and the rally has drawn a wider range of participants. Both declined to comment.
Launched about a decade ago, Zcash has drawn renewed interest amid concerns that artificial intelligence is making it easier to track financial activity on public blockchains, and after a wave of kidnappings and violent robberies targeting crypto investors heightened worries about visible wealth. The catalyst arrived in March 2025 when a landmark US ruling removed many uncertainties around privacy coins, prompting promoters such as Arthur Hayes to tout Zcash as a Bitcoin hedge during a then-record rally in the original cryptocurrency. “It started with a narrative as privacy became a hot topic again, well-known investors started pitching Zcash as a kind of private Bitcoin, and then real money followed,” said Thomas Probst, a research analyst at Kaiko. Cypherpunk Technologies, backed by the twins, and Fortitude Mining, backed by Silbert, have become two of the largest miners. Both are set to spend tens of millions of dollars on additional computing power. Like Bitcoin mining, Zcash mining is a zero-sum competition for a fixed supply released periodically; greater computing power increases the probability of earning the token reward. Fortitude expects to reach 20 percent of network mining capacity after its latest installments; Cypherpunk already holds about 20 percent. In August, DCG’s Grayscale became the first to launch a US Zcash ETF, converted from a 2013 trust for accredited investors. The twins filed for their own ETF earlier this month. Like Bitcoin, Zcash has a fixed supply cap that has amplified price gains as capital arrives. “There was a coordinated effort across a few large-scale buyers or miners, both in the US and China,” said Ethan Vera of Luxor Technology, which has since snowballed. Silbert wrote in a June filing, “We believe Zcash represents one of the most compelling opportunities in digital assets.” Cameron Winklevoss told the Token2049 conference in Singapore that the opportunity is “deja vu all over again with Zcash.”
High-Frequency Traders Pour Billions into Compute as the Speed Race Evolves
For years firms such as Jane Street and Hudson River Trading competed over nanoseconds. That contest has now expanded into a race for compute—the processing power at the center of the artificial-intelligence revolution. The bet is large and potentially risky amid growing doubts about the costs and feasibility of data centers and next-generation chips. Several AI-related initial public offerings have suffered setbacks this month, and borrowing costs have risen for companies building the infrastructure. For the high-frequency traders, however, investment is nonnegotiable if it secures greater processing capacity and faster chips. These firms profit from tiny price differences as they enter and exit positions and match buyers and sellers; increasingly they use machine learning to predict market behavior, so success is tied to computer power. Computing prowess is also vital to attracting top talent. By one estimate, expenditure on computing power has surged as much as 20-fold in the past four years. “If you don’t want to be in that game, it’s going to be difficult to stay involved in the more systematic trading strategies which are required today to be a market maker,” said Jan Boomaars, chief executive of Optiver.
Hudson River operates a facility in a former olivine mine in western Norway, nearly 3,500 miles from Wall Street, where racks of servers cooled by fjord water process data. Powered by GPU clusters containing Dell servers and Nvidia chips, Lefdal Mine Data Centers bills itself as one of the greenest on the planet. Ten years ago the firm could meet its needs with one or two sites; now the Norway mine is one of multiple facilities. “We have been doing research and development to let us train bigger and better models,” said Iain Dunning, head of AI at Hudson River. “That means more compute to do that training and run these models.” The need for data centers has turned the competition into a race for real estate once again, this time seeking abundant cheap power and cooling rather than proximity to exchange servers. XTX Markets has built a €1 billion data center in the forests of Kajaani, Finland, set to come online by year-end, with a second facility planned for 2027. Jane Street operates a Texas center housing more than 4,000 Nvidia GPUs across 56 liquid-cooled server racks connected by thousands of kilometers of fiber; it is discussing a second facility. Susquehanna is in talks for Texas space to complement Illinois and Pennsylvania sites and is investing in an Oregon startup developing floating, wave-powered AI data centers. Jump Trading and Tower Research Capital operate their own centers and lease others. Tower executives said the scale of resources demanded by quantitative researchers—and thus the infrastructure build-out—has escalated within the past 12 months. “It’s about securing resources,” said Chief Investment Officer John Cogman. “There is limited supply.”
Chip technology evolves rapidly, so systems purchased today could become obsolete; markets remain noisy and competitive, making machine-learning edges uncertain. Boomaars at Optiver nonetheless argues that the danger of inaction outweighs the risks. The firm has billions in capital expenditure planned and runs data centers in the United States that it designed but does not own; it is in talks to replicate the model in Europe and Asia. “Our capex is fundamentally different versus a few years ago,” he said. “This is a 10-year-plus investment cycle.” Citadel Securities works with hyperscalers, particularly Google, and has significantly scaled its use of Google’s tensor-processing units over the past 18 months. Google engineers met with the firm to fine-tune the chips; the market maker said the TPUs ran workloads up to four times faster than GPUs at 30 percent lower cost. President Jim Esposito noted that the partnership allows rapid scaling of research and compute while reducing complexity. Hudson River also contracts with Google and Amazon Web Services and, more recently, with neoclouds. It signed a multiyear deal with CoreWeave in August after a May agreement to rent Nvidia chips from Lambda. The firm is spending $1 billion a year on AI, a figure that is trending higher. “The decisions we are making now will have effects many years into the future in terms of the contracts we are signing and the life cycle of the chips as well,” Dunning said.
Jane Street earlier this year bought a $1 billion equity stake in CoreWeave while pledging to spend $6 billion with the company for compute—a $7 billion commitment against nearly $40 billion of net trading revenue last year. It has signed a $13 billion agreement with Crusoe and is an investor in Nscale, which faces investor pressure over its valuation as it prepares to go public. Profitability rests on record trading volumes that may not persist, and there is no guarantee every AI firm will deliver. If a cloud provider falls behind or loses key contracts, the traders may not receive the compute they expect, threatening both research capacity and the ability to recruit and retain specialists. Boomaars emphasized the need to control one’s own infrastructure rather than relying solely on cloud providers. Jane Street is also poised for a large return when Anthropic goes public as soon as the middle of November, owing to a stake partly acquired in the bankruptcy sale of Sam Bankman-Fried’s assets; its historic July loss was tied to an investment in Situational Awareness. Beyond cloud providers, the firms have backed an array of AI startups. Hudson River is using and investing in security company Gray Swan. Jump has put money into Flapping Airplanes and Sooth Labs, research labs addressing data scarcity and long-term forecasting. Two years ago two Harvard dropouts presented Jane Street engineers with a plan for a custom AI chip designed to run at lower voltage. After months of detailed questions, Jane Street in August led a round valuing Etched at $21 billion—more than four times its value nine months earlier—and became the first customer for its finished chips. Jump and Hudson River are also testing and investing in Etched. Positron, working on low-latency inference chips, recently raised funds at a valuation nearly five times higher than seven months ago; Jump is both an investor and a tester, and Hudson River has become an investor and customer. “If you find that advantage, then it doesn’t matter how expensive the infrastructure is,” said Positron CEO Mitesh Agrawal. “The return on investment becomes very, very clear.”
Corporate Adjustments, Product Launches and New Market Instruments
American Express is cutting 5 percent of its global headcount, or roughly 3,500 of its 78,000 employees, as Chief Executive Officer Steve Squeri seeks to contain rising costs. Squeri told analysts the reductions aim to make the company more agile, reduce layers and accelerate decision-making. Financial firms have been trimming staff in recent months, some citing greater use of artificial intelligence; Barclays this week said it would eliminate 5,000 jobs, HSBC is planning reductions in its UK wealth-management business, and Citigroup has also lowered headcount. Amex has faced pressure to retain premium card members, refreshing certain products and adding perks last year to its Platinum card. This month it partnered with Airbnb so that certain luxury rentals count toward the annual lodging credit. Expenses rose about 9 percent to $14.5 billion in the third quarter, below the $14.8 billion analyst estimate. Member-rewards costs increased 10 percent and marketing expenses 11 percent; Chief Financial Officer Christophe Le Caillec had previously guided for marketing expenses to rise about 10 percent in the second half of 2026. “It’s been highly competitive,” Squeri said of the fight for premium cardholders, “and our assumption is that it will remain highly competitive.”
Shares fell 1.8 percent to $319.45 Friday morning, extending the year’s decline to nearly 14 percent. Third-quarter adjusted earnings of $4.68 per share beat the $4.49 consensus, and the company raised full-year 2026 guidance to $18.30–$18.60 from $17.30–$17.90. Billed business of $454 billion fell short of the $456.9 billion estimate, affected by the exit of some small-business co-brand deals. Truist Securities analysts including Brian Foran called the headline results positive but the details mixed. Results were also affected by the sale of Amex’s equity interest in Global Business Travel Group, which produced a $751 million after-tax gain; the company used a portion to fund a $253 million after-tax restructuring charge, with the net gain excluded from adjusted figures. “Our business momentum continues, with strength in billings, new acquisitions and card member retention, and excellent credit quality,” Squeri said. The company faces a $350 million fine for anti-money-laundering deficiencies identified by the Office of the Comptroller of the Currency and the Federal Reserve; Amex has said the penalty will not affect previously issued 2026 guidance or any 2027 outlook and that the orders impose no asset cap.
Apple’s $2,000-and-up foldable iPhone Duo went on sale Friday, drawing overnight lines reminiscent of earlier launches and confirming strong demand even as supply remains constrained. The device represents the company’s most radical iPhone redesign in nearly two decades and a major bet on a category that has remained niche. Stores from New York to Beijing and Singapore saw crowds of preorder customers, walk-in shoppers hoping for limited inventory, and resellers. In Singapore a few hundred people lined up, including a family of seven from Myanmar who had camped overnight. “This is the first true innovation Apple have had in years,” said Peter Ingram, a London-based chief technology officer. New orders on Apple’s website are now quoted for delivery at the end of January, though some estimates have moved forward to November or December—among the lengthiest delays for a modern Apple product. At the Fifth Avenue store in New York the line stretched multiple blocks by 5 a.m.; Greg Joswiak and Vanessa Trigub marked the launch. In Lawrence Township, New Jersey, the 256- and 512-gigabyte models sold out within the first half hour. Chief Executive Officer John Ternus greeted shoppers at an Austin store, according to CBS. In China turnout was more moderate, consisting largely of loyal customers who had registered in advance. The Duo is difficult to produce because of its advanced hinge and new display technology and is built in only a limited number of facilities in China. Apple expanded traditional iPhone production to India in recent years, aiding supply, but the foldable remains constrained. Prices reach as high as $3,199 for 2-terabyte models. Competitors including Samsung, Xiaomi and Oppo have also raised prices amid memory-chip and component shortages. Apple reports quarterly results on November 2; those figures will not include Duo sales, which began after the period ended around the end of September, but will reflect early sales of the iPhone 18 Pro and Pro Max that debuted September 18. Other new versions, including the entry-level iPhone and updated Air, will not go on sale until next year, a schedule change intended to spread revenue.
Kalshi is pitching the world’s largest banks and hedge funds on exchange-traded futures contracts tracking the consumer-price index and the core gauge that excludes food and energy, targeting a December launch. The firm has engaged Michael Ashton, a former Barclays trader known as the “Inflation Guy,” to design the contracts and build institutional interest. The contracts would be the only futures tied directly to CPI, offering a way to court macro investors active in the multi-trillion-dollar markets for interest-rate and bond futures currently dominated by CME Group and Intercontinental Exchange. CME previously attempted CPI futures but does not currently list them. “There’s no exchange that trades this and they want to be the inflation exchange,” Ashton said. Kalshi confirmed it is working on the product but declined further details. The contracts would cover the next 12 reference months and then May and November for the subsequent four years, trading 24 hours a day from Sunday to Friday with Kalshi Klear as clearinghouse. Kalshi’s prediction-market business is dominated by sports but already offers binary event contracts on whether CPI exceeds certain levels, primarily attractive to retail. It also offers perpetual contracts on crypto and commodities that lack expiration dates, making them difficult to integrate into existing institutional infrastructure. The dated CPI futures address that limitation while expanding beyond sports contracts that many states contend skirt gambling rules. CME Chief Executive Terry Duffy has been critical of Kalshi’s perpetuals, saying institutions cannot manage risk without an expiration date. The US inflation market is centered on $2.2 trillion of Treasury Inflation-Protected Securities and more than $5.4 trillion of over-the-counter inflation swaps. Unlike traders in Treasuries or equities, inflation traders currently lack standardized futures. Ashton has consulted hedge funds, long-only managers and banks active in TIPS and swaps. Mark Spindel of Potomac River Capital said a deep futures market would be a valuable addition for both speculators and hedgers who have been stung by inflation surprises. Earlier CME products launched in 2004 did not fully match the needs of the broader TIPS market.
